CUB: Gas companies seeking $3 billion pay raise

Illinois gas utilities are trying to steamroll legislation through Springfield, Ill., that would allow the companies to hit consumers with 10 years of rate hikes totaling nearly $3 billion — without having to prove they need those increases.

The “automatic rate hikes bill,” S.B. 1665/H.B. 2414, would weaken consumer protections and allow Peoples Gas, Ameren and North Shore Gas to set delivery rates by formula instead of the traditional regulatory process. It also would give the utilities — whose parent companies made $840 million in 2012 — a guaranteed profit rate for shareholders.

Citizens Utility Board Treasurer L. Kristofer Thomsen calls it “one of the most damaging bills we’ve ever seen,” and Executive Director David Kolata agrees. Chicago’s Peoples Gas is promoting the bill, saying it needs yearly, legislatively mandated rate hikes to make pipe upgrades. But Peoples admits it would do the same upgrades even without the bill.

The current regulatory system is managed by the Illinois Commerce Commission (ICC). It is designed to allow utilities to get the increases they need to do upgrades and make a healthy profit. It also allows CUB to advocate for consumers and make sure utilities don’t get more than necessary. The gas utilities’ plans would scrap those protections.

At the latest report, ComEd was close to getting new state legislation passed that would undo rate cuts the ICC granted consumers in 2012. This move follows the first year ComEd implemented a “formula rate,” intended to give the utility yearly increases to pay for $2.6 billion in smart meter installation and other upgrades over the next decade. The formula was passed by the General Assembly in 2011, but ComEd and the ICC clashed over interpretation of the law in 2012.

Consumer advocates won $134 million in rate cuts last year; then ComEd said it didn’t have enough resources to begin the upgrades it had promised to begin in 2013. Jan. 1, ComEd got an $89 million rate hike, but the company still said it could not begin upgrades intil 2015. ComEd returned to the General Assembly to push Senate Bill 9, which is designed to bulk up the company’s revenue. It would help the utility recover about $100 million in rate cuts granted customers in 2012, plus interest. It would also allow ComEd to continue to pursue a court appeal of ICC rulings on issues that reportedly amount to another $35 million.